FINANCIAL IMPROVEMENT AND AUDIT READINESS WEBSITE
Guidance
About FIAR Guidance
About the FIAR Directorate
The FIAR Directorate, a program management office, is responsible for managing the FIAR Plan and ensuring that DoD-wide financial improvement efforts continue to mature and are integrated with transformation activities across the Department. Among its responsibilities, the FIAR Directorate develops and issues detailed financial improvement and audit preparation methodologies and guidance, also known as the FIAR Guidance.
The FIAR Guidance provides instructions for implementing a consistent, Department-wide plan for achieving the Department's financial improvement and audit readiness objectives. In accordance with the National Defense Authorization Act of Fiscal Year 2010, Section 1003, the FIAR Directorate developed this guidance for reporting entities and service providers working toward the goal of audit readiness. It defines the department's goals, priorities, strategy, and methodology to becoming audit ready. Furthermore, this guidance details the roles and responsibilities of reporting entities and service providers, as well as the processes they should follow to achieve audit readiness.
FIAR Strategy
A clear, comprehensive strategy for achieving audit readiness is critical to ensuring that limited resources are assigned effectively to facilitate sustained and measurable progress. The FIAR strategy provides a critical path for the Department because it balances the need for short term accomplishments (Wave 1) against the long-term goal of achieving an unqualified opinion on the Department's financial statements (Wave 4). The strategy prioritizes the Department's material business processes within 4 waves, and describes the steps each reporting entity must take to address the requirements of each wave. The first three waves should be performed concurrently because they focus on both of the USD(C)'s priorities, budgetary information and mission critical asset information.
For a detailed description of the specific steps each reporting entity must take to address the requirements of each wave (i.e., identify key risks of material misstatement, key controls objectives and key supporting documentation), please click on the waves in the graphic below.
FIAR Methodology
The FIAR Methodology (Methodology) provides a step-by-step approach to achieving improved financial information and audit readiness. Reporting entities should focus their audit readiness efforts on improving their processes, controls, and related documentation based on the results of the application of the Methodology.
The Methodology contains phases and key tasks for achieving improved financial information and audit readiness. The phases and key tasks, which can be applied uniformly regardless of the size, materiality or scope of an assessable unit, are as follows:
Embedded within each phase of the methodology is the reporting entity's considerations of its service providers and how their activities affect its financial processes and related audit readiness initiatives. For a detailed description of the roles, responsibilities and tasks, activities, and resulting work products that must be completed by both reporting entities (Components) and Service Providers, please click the boxes below:
The FIAR Directorate, a program management office, is responsible for managing the FIAR Plan and ensuring that DoD-wide financial improvement efforts continue to mature and are integrated with transformation activities across the Department. Among its responsibilities, the FIAR Directorate develops and issues detailed financial improvement and audit preparation methodologies and guidance, also known as the FIAR Guidance.
The FIAR Guidance provides instructions for implementing a consistent, Department-wide plan for achieving the Department's financial improvement and audit readiness objectives. In accordance with the National Defense Authorization Act of Fiscal Year 2010, Section 1003, the FIAR Directorate developed this guidance for reporting entities and service providers working toward the goal of audit readiness. It defines the department's goals, priorities, strategy, and methodology to becoming audit ready. Furthermore, this guidance details the roles and responsibilities of reporting entities and service providers, as well as the processes they should follow to achieve audit readiness.
FIAR Strategy
A clear, comprehensive strategy for achieving audit readiness is critical to ensuring that limited resources are assigned effectively to facilitate sustained and measurable progress. The FIAR strategy provides a critical path for the Department because it balances the need for short term accomplishments (Wave 1) against the long-term goal of achieving an unqualified opinion on the Department's financial statements (Wave 4). The strategy prioritizes the Department's material business processes within 4 waves, and describes the steps each reporting entity must take to address the requirements of each wave. The first three waves should be performed concurrently because they focus on both of the USD(C)'s priorities, budgetary information and mission critical asset information.
For a detailed description of the specific steps each reporting entity must take to address the requirements of each wave (i.e., identify key risks of material misstatement, key controls objectives and key supporting documentation), please click on the waves in the graphic below.
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FIAR Methodology
The FIAR Methodology (Methodology) provides a step-by-step approach to achieving improved financial information and audit readiness. Reporting entities should focus their audit readiness efforts on improving their processes, controls, and related documentation based on the results of the application of the Methodology.
The Methodology contains phases and key tasks for achieving improved financial information and audit readiness. The phases and key tasks, which can be applied uniformly regardless of the size, materiality or scope of an assessable unit, are as follows:
- Discovery: Management documents its business and financial environment, defines and prioritizes its processes into assessable units, assesses risks and tests controls, evaluates supporting documentation, and identifies weaknesses and deficiencies.
- Correction Action: Management defines and designs its audit ready environment, develops and documents solutions to resolve deficiencies, identifies resources required to implement corrective actions, and defines validation procedures that will be performed to determine whether corrective action successfully remediated the deficiency.
- Evaluation: Management evaluates corrective action effectiveness through testing and determines whether it can assert itself as audit ready.
- Assertion: Management prepares and submits assertion documentation to the OUSD(C)/FIAR and DoD IG. Documentation includes a management assertion that its controls are suitably designed and operating effectively based on the results of work performed during the Discovery, Corrective Action and Evaluation phases.
- Validation: OUSD(C)/FIAR, DoD IG reviews and provides feedback on management's assertion and engages auditor to perform an examination of its audit readiness assertion.
- Audit: DoD IG or IPA audits the assessable unit or financial statements.
Embedded within each phase of the methodology is the reporting entity's considerations of its service providers and how their activities affect its financial processes and related audit readiness initiatives. For a detailed description of the roles, responsibilities and tasks, activities, and resulting work products that must be completed by both reporting entities (Components) and Service Providers, please click the boxes below:
| Methodology for Reporting Entities | Methodology for Service Providers |